wait and see mode. investors are waiting to hear from ben bernanke, today's fed meeting, and tomorrow's ecb meeting. yes, august 1st so we're looking back at the month of july. for the month, the dow actually gained 1%. there were far more down days than up days. it was something like 13 down days for 8 up days. at the end of the month, the dow was up by 1%. s&p was up by 1.3% almost. and the nasdaq was higher by about 0.15%. if you take a look at best performing dow component in july, it was walmart. it was up about 7%. you had the worst performer being intel and microsoft. they actually tied for worst place. u.s. equity futures, as we begin this first trading day of august, you'll take a look and see at this point, are you looking at some green arrows. dow up by 43 points. nasdaq futures are indicated higher by over 12 points. andrew, that's the good news.

the bad news is, august has been the worst month for the markets in the last 20 years. andrew, i'll send it over to you on that up note. >> thank you for that up morning note. today's top market story, let's talk about it. the fed, policymakers wrapping up a two-day fomc meeting. decision expected 2:15 a.m. eastern time. they say the central bank is ready to act against a weakening economy but the expectation is it will stop short of an aggressive measure, at least for now. we'll discuss all the options on the table with former fed governor mark olson. also the adp employment report coming at 8:15 a.m. eastern. forecasters say they likely added 108,000 private jobs in july. we'll get the first numbers on cnbc from macro economic adviser chairman joel prakken.

chinese manufacturing falling to a eight-month low. latest stat suggesting the sector barely growing. meantime, another survey suggesting more market-sensitive private sector in china is starting to recover. on earnings front we have a few companies to watch before the bell this morning. we'll hear from comcast, harley davidson, mastercard and time warner. andrew, thank you. in corporate headlines, lab corp is reportedly the target of a massive private he can quit buyout. they say tgi capital and bain capital are a few that have the wherewithal to join hands to make a run at this company, which does lab testing. equity check of $3 billion to $4 billion would be expected for the deal. a market cap of $1.8 billion. doingle is postponing a launch of the nexxus q.

what it is, you're asking? it's the first -- the company's first self-designed and marketed consumer electronics device. the company announced delay of the media player, which is what it is, in an e-mail announced it would be delaying it to customers who had preordered it. google says it wants to add more features. carl ikrstcahn is selling b mgm shares. he looks good there. not the most recent picture of carl icahn. >> what do you think that is, 10, 15 years? >> i would give that a 10 to 15 year number. he may have aged a little but his portfolio and net worth has aged in a way the finest wine

has never aged. i just looked at the calendar to figure out if there was something funky. it was july 6th, now july 3rd. there's nothing weird about -- >> no, no, no. it just is. time is marching on. >> it's because summer is the time we want to pass really slowly, so they make it go quickly. summer goes by in a blink. maybe because i was out a week. >> going back on a carp diet where every day is painful. maybe the week off something it. seems like zandi and these people were just here when -- right, when we did the last lousy number? now we have july coming up. you know what, it is -- >> school is right around the corner. that's terrible. >> it does mean -- there's a lot of anticipation as we're in the last 100 days. and every one of the job reports, only a couple more, and it's just really important. >> three more. august, september -- we'll are three more reports.

>> october, september, october. >> september is when it will kick in and people will be back -- >> supposedly people start watching with 100 days to go. >> if the fed doesn't miss today -- if the fed doesn't move today, the jobs report will be key to see if they move next month. >> comcast earnings. >> 7:00. >> i would say if we're going to screw the parent company's earnings up, today would be the day to do it. >> why? >> because it's 7 a.m. when the company -- when it comes. they're all going to be watching some event. >> from the olympics? >> they're going to be watching some some event. >> they may tune in briefly. >> or may not. >> what if it's an important event, they have tickets and it's live and everything? if there was a time, i mean -- let's get it right, obviously, but this would be a day when they may not be paying quite as much attention. >> probably not. >> how are you? >> i'm doing okay. where do you want to go with this? >> i don't know whether -- do you want to out yourself so people understand why you're a

little bit -- >> i'm a little out of it. >> you got some weird thing going on, some allergic thing. >> looks better. >> it looks fine. >> it looked like i was punched in the lip. >> it did. >> i think it was a bite. >> i might have gotten bit by something. i'm talking a little funny. >> a little funnier. >> took some medicine this morning. like a benadryl -- >> antihistamine. >> it might be a spider bite. >> you're going to get tieder and tieder as the show goes on. the swelling looks like it's going down. >> i may look better but i don't sound better. >> you went to novocaine -- >> no, i just had my teeth cleaned. >> that's probably not it. >> that's not it. >> did you have any botox? >> no botox. not yesterday. not yesterday. that could be coming back to haunt me from a week or two ago. >> you never know. >> straight to your brain? >> we feel okay. you're fine. >> honestly, it looks better. >> it looks fine. nobody would notice. if i hadn't said it, nobody

would know anything. >> thank you. we could have said i was punched or something in a street fight. >> occupy wall streeter. >> why don't we get a check on the markets this morning. we took a look already and the futures are indicated slightly higher. first trading day of august. right now dow futures up by 47 points. s&p futures up by just about 4.5 points. i spoke a moment ago, i said it was the markets. august has been the worst month for the markets. it's not the markets overall. the worst month for the s&p 500. it's been the worst month for the s&p 500 for the last 20 years. we'll see if we finally break the streak this time around. oil prices are barely budging this morning. if you take a look, they're higher by nine cents, 88.15. the ten-year at this point is yielding 1.487%. back below 1.5%. dollar is a little bit stronger against the euro again. again, most of these markets are barely budging as they're waiting to hear not only what the fed has to say but what the

ecb has to say on thursday. 123.06 is where the euro stands right now. gold prices are not seeing major moves this morning. up by $1.80. >> let's go across the pond. time for kelly evans, who's standing by for global markets report in the land of the olympics. miss evans. >> andrew, that's right. land of the olympics. we'll see if britain today can finally, on day five here, get a gold medal. a couple of different ways they could make that happen. in the meantime, let's take a look at the trading session. you can see we're roughly split between decliners and advancers. stock europe 600 up 0.3% on the morning. we haven't seen a ton of action because clearly with all of the data coming out and all of of the policy meetings, ecb, bank of england tomorrow, that's what people are waiting before they put on any major positions. take a look at the european,

most part green arrows. the ftse 100 is up 0.7 of 1%. this is despite a weak batch of data across the board. first of the month we know they'll get these pmi figures. that's what we got in britain. uk pmi was three points lower than expected, came in at about 45. lowest reading since 2009. export orders posted the biggest fall also since early 2009. market up, 0.7%. xetra dax up 0.13%. ftse mib down. broadly speaking, it seems as though the comments from china yesterday about more stimulus, fiscal and monetary policy being on the way at the end of the year, hasn't really generated that much of a risk on move. a guest on the program said he thinks it's because they're not being specific enough with regard to size and timing of any new measures. if you want to see more of a reaction, take a look at currency markets because the

aussie/dollar has been at a level against the u.s. dollar -- we're not 1.0530, we were at year to date highs, reflecting a bit more of the bid in markets. elsewhere, weakness. we've seen the euro/dollar slightly to the positive, 1.2307, fighting to stay out of the red this morning. take a look at bond markets, too, because for all of the talk about what the ecb may or may not do, the real one to watch, of course, is spain. spain and italy down here italy has been back and forth above 6% all morning. still up at 6.669%. extraordinary sequence of events this morning where an interview that bundesbank president wiedemann in june, published by a magazine, picked up by news wires. he talks about how the bundes doesn't want to give license.

you know it's an old interview, just reiterating the intransigence germany has. and came out saying he's against giving esms a banking license, saying it would encourage riskier behavior. he doesn't want germany to be part of an inflation union. the ten-year bund selling off a little bit. but yield incredibly low 1.33%. not a lot of inflation here at the moment. that's for sure. >> kelly, thank you very much. we'll check back in with you again tomorrow. in the meantime back in the united states, in washington news, congressional leaders announcing a stopgap spending pact, aimed at eliminating a government shutdown this fall. it would fund the government at a level called for by last year.

>> political junkies, an election in texas is worth looking at. most publicized race is all over the place, on the front page of "the journal." republican nominee for u.s. senate to replace senator kay bailey hutchison. he is a tea party guy, a former state solicitor general, tea party favorite, ted cruz, won a runoff election, harvard educated. he's hispanic but a proponent of tough immigration laws. he beat lieutenant governor dave duherst, who was the gop candidate, including rick perry and jim demint was a backer, governor palin was also a backer. where was that? on some network they played "stupid girls" before a story about her. >> what? ♪ stupid girls and then they did the story. >> cnn. >> cnn is where they did it?

>> and then they had to come back -- i messaged -- >> what did he say? >> i said, do you have a financial -- just asking him, are you going to restart one or something? because we were old buddies. >> what did he say? >> he said, didn't i give you a ten-year contract? he was kidding. but he did. no, i'm kidding. we wish -- there's a lot of -- who do you get? did you see "headline news" numbers? it's scary. all tv is dealing with this new distribution model. i don't know where i'm going with this. >> we'll get out of here. >> this is worse than your fat lip, i think. >> we'll go to break. coming up, we'll focus on the fed, what the markets want to hear from today's fmoc decision. first, a bit of sad news, author, playwright and actk gor

vidal died.

welcome back. the u.s. equity futures are indicated slightly higher at this hour. s&p up by 4.5%. factories and workshops across india are up and running again today. yesterday there was a major system collapse that led to a second day of power outages. by the way, yesterday was the worst blackout in history. there were an estimated 620 million people left without electricity. guys, do you know what the second worst power outage in history was? >> no. >> it was monday in india when something like 320 million people were left without power. back-to-back two days of the worst power outages we've ever seen -- >> just grid problems, right? >> three different grids went down over the course of two days. >> makes you question the whole

infrastructu infrastructure. >> they said they were going to investigate the causes. which is weird. >> india's hurdling into -- what century are we? 22nd? >> 22nd -- >> no, 21st. >> 21st century. it's 2012. >> as they hurdle into it economically, there are things that aren't quite -- >> the entire government is in potential -- potentially could collapse over this. i mean, when you have people who are without power for that long. >> i will say one more thing. i saw a lot of infrastructure in europe, a lot of trains and everything. i was under the impression that everything was gleaming and new and bathrooms were clean. it was like we are -- according to tom friedman, we're living in the stone age in this country in terms of infrastructure. it's not so. >> he was comparing it to china. >> maybe to china. >> not to europe. >> believe me, i was glad to get back to even, you know, the worst of our infrastructure. >> you were in paris, italy.

i think -- >> france. >> the eurostar -- >> germany may be -- >> the trains we were on. all three trains were -- >> really? okay. >> you know who they need? they need -- heising has this service he's rolling up now, swisher, that goes in -- he's a genius at cleaning public rest rooms. you outsource that, and do a roll up like auto nation, and they need him over there to -- >> when tom -- >> -- to get things clean. it was hideous, hideous in places. i walk in and walk out. i don't -- you know -- >> i do that at newark airport, too. >> i do, too. if you wash your hands, you're opening up a whole new -- anyway. sorry. >> it's you. oh, let's get to today's national forecast. erik fisher joins us from the weather channel. eric, welcome from wherever you are in the country right now. >> atlanta, georgia, becky. thank you very much. take a look at the forecast

there outside of your studios in new york. got a storm on the west side of town. if you're getting into manhattan, about to see heavy rain. metro north from fairfield county in connecticut, have to deal with potential isolated flooding. not a lot going on on the east coast. coastal maryland, coastal delaware, starting off with rain. storms to the outer banks, down toward panama city in florida. for the beachgoers, that's where we have the impact this morning. this afternoon could see bigger storms at i-95 corridor, big es severe threat along the outer banks. looks like major airports could be slowed down, on could be talking about significant delays. minneapolis. also the big story is the heat. denver, st. louis, indianapolis have now officially clocked their hottest julys on record. the big heat, all-time record highs. central southern plains, 112 at oklahoma city today. dallas, 109 degrees outside. that continues into thursday. more of the same on friday.

unfortunately, some big heat for this part of the country. also, the drought looking to get much worse. we've had it in the midwest and now getting worse across places like oklahoma, texas, affecting agriculture in a big way across the plains. becky, back to you. >> eric, thank you very much. we appreciate it. by the way, we like having you. >> what? >> in china what? >> do you know what they do in china? >> they bring toilet paper with them. >> there's usually just a hole in the floor. >> right. people going through the subway, they put a euro in, even to get in there. i was like -- you know, i didn't -- >> doing the dance while you're waiting. the next few days will be extremely busy for the markets. today, a fed decision and the adp employment report. tomorrow an ecb decision. friday, the big jobs report. joining us bob brown, chief investment offer for northern trust. in chicago, ira harris of practice trading. who was i reading, ira, just

singing your praises? what desk did you run for -- you're a legendary dude out there, right? drexel or -- what desk were you running? >> no, no, that's the other ira harris who did run solomon -- >> you haven't done -- you're -- you're not the ira i thought you were. i was going to start listening to you. with that in mind, let me get to bob, he might know -- no, we'll be back to you in a second, ira. bob, i don't know whether you've been on "squawk box." >> first time. good morning. >> good morning. good to see you. >> i usually do "power lunch". >> okay. that's a great show. a sister show. we love sue and tyler? >> yes. >> okay. got it. i'm sorry. all right. cut! no.

anyway, he can quequities, bond- >> we're overweight the international world. >> your overweight international world? >> yes. >> i thought we were the best house in the world. >> underweight the rest of the world. neutral emerging markets. we think a moderate growth environment will be sustained in the u.s. low rates. the fed is focusing on avoiding recession. so, whether they do something today or august or september, i think the market's got to focus on that bias toward using monetary policy to keep the state of repair going. >> wow. training wheels for -- what do you attribute the need for training wheels four years after a crisis? >> major financial crisis. major credit contraction. everybody knows how bad things were. >> why is it still contracting? and i hear again and again that it is. is it something we've self-inflicted or just a hangover -- >> in the u.s. there's good signs of loan broet taking place. the private sector is doing

better than the headline numbers would indicate. disappointing figures in gdp are coming from the public sector. it doesn't mean it feels like a recovery for most american. this is not going to be your typical recovery where the rising tide -- >> i've heard this before. the private sector is doing quite well. did you just actually tell me that? >> yeah. >> did you see what happened to obama when he said that? >> well, that's -- >> the public sector stopped shrinking a couple months back. there's nothing good happening in the private sector right now in terms of job growth, is there? >> i'm talking about from a corporate sector. corporations are making a lot of money. the s&p is up over 10% year to date. most people are acting like it's a bear market. we're actually in the middle of a bull market and the bearish attitude is leaving a lot of money on the table. >> why aren't you seeing the money, as well as corporations are doing, why aren't they hiring and expanding plants? >> i think they're certainly cautious about the future. are we living in a new normal? it is a gdp environment of 2%,

not 3.5%. they're cautious. i think what's going on in washington is giving people a little pause, not knowing what tax policy is going to be, who's going to be sitting in the white house. >> we're back to the chicken/egg. they're now responding to a 2% or 1.5% environment instead of a 3.5% environment. why are we in a 1.5% environment? >> if you take a look at the credit expansion that took place in the 2000s, a lot had to do with home equity takeout. >> we were living -- >> living beyond our needs. >> ira, do you agree with this? >> you know -- well, no, because i see it from a different way. the 1.5% it struggles because the world is struggling around us. japanese were able to muddle through because there was a lot of global growth all around it so it could make mistakes. now to make mistakes in your

policy is really -- carries a burden because we have europe -- europe is a mess. other parts of the world. brazil has certainly slowed down from its growth. of course, everybody worries about china. japan has yet to really come out of its bad economic environment. so, the whole world around the united states is not helping us. so, this was what makes a much more difficult going through and why we're in a muddled stage. we're not getting any help from the rest of the globe at this moment. >> bob, did you say we're in a bull market? you think we're up 10%? should we still be considering this an upward trend in equity? >> yeah. if you look out over five years, annualized earnings growth is going to be about 8.5%. >> you're still pretty positive? >> yeah. 2% growth is going to be fine with 0% rates. >> thank you. ira, thank you. coming up, we'll have more of this morning's top stories.

mark olson, too. the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network -- securing a world of new opportunities. ♪

to drive a car filled with as much advanced technology as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations... search with bing... and listen to pandora. presenting the 2013 lexus gs, rx and the all-new es, the leading edge of the leading edge. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection. get great values on some of our newest models. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.

we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade.

♪ ♪ thunder ♪ thunder ♪ thunder good morning and welcome back to "squawk box" on cnbc. >> good morgan? >> i say that sometimes. >> jpmorgan? >> yeah, that was a little salute to jamie. hope you're doing okay. i'm joe kernen along with becky quick and andrew ross sorkin. united states is raising pressure on eurozone leaders to

take decisive action to clean up those rest rooms -- no, to solve -- we were talking about that earlier. >> yes. >> you knew what i was going to say. solve the region's debt crisis. tim geithner and european central bank said they must lower troubled members' lowering costs. whether that means buying actual sovereign debt, which is what we thought was going to happen last week, i don't know if it was close or how quickly they can do it -- >> some people say it will take at least five weeks. necessity have to have a german court that rules, that isn't expected for some time to come. we'll see what we get on thursday, if they can maybe keep us pulled along, believing it's going to happen. >> it's a very scary, vicious cycle that you've got no employment really in spain, and you're borrowing -- how do you possibly have an economy that can fund those borrowing costs? one thing lead to another. sooner or later -- you know, in greece -- >> vicious circle. >> at greece we're at that point where there's no way that the

economic power of that country can ever make good on all the debts that it has. you're just staring it in the face. sooner or later -- >> spain is, what, 25% but 40% for younger people? >> right, yep. i was reading anectdotal material, people thought they would be retiring on 1300 euros a month. they would do okay and do traveling. unfortunately, they have both their kids living at home with their kids. the lady was saying, i would like to get some teeth, but that's just not going to happen right now. but then the article was saying, she was still smiling but you could see the gaps -- i mean, it's rough. it's tough. >> what are demographics like in spain? are they growing? >> i don't know that. you mean in -- there are places -- >> you can't fight demographics. if they're producing new people -- >> that's the problem japan has, too. why don't we take a look at

markets this morning. the first trading day of august, august 1st. we've been looking back at mthe month. the dow and s&p eked out gains, with 13 down days, 10 up days. futures are indicated higher. dow futures up by 0.4%. same story for the s&p 500. oil prices have been barely budging, up about 30 cent right now to 88.36. the ten-year note has fallen, yield back below 0.156. obviously waiting to hear what the fed has to say later today. when we'll get the announcement from the two-day meeting that's been going on. dollar at this point is slightly lower against the euro. again, very slight moves here. 1.2319 is where the euro stands. gold prices are morate.

today is decision day for the fed. with recent concerns about jobs, europe and fiscal cliff, many are asking if qe3 is in the cards. joining us to talk about the challenges facing the fed, mark olson, former fed governor and current co-chairman of risk advisers. we appreciate you being here this morning. just set the table for us. what do you think the options are that are truly on the table? >> well, that's a -- that's a very good question. i think that there are more options that are on the table now than there has been in many meetings. number one, i think there's going to be a change in the language. i think they'll extend the time very likely where they'll keep rates at a low rate. other things are possible. probably the more likely is whether or not they're going to start purchasing mortgage backs. i think right now probably what is on the table is that the chairman and others are saying, where is our consensus?

because what they don't want to have, i don't think out of 12 votes is a 7-5, 8-4 or even a 9-3. >> is there any chance there is going to be some type of conversation with mr. draghi? meaning, any sense there's going to be a combined effort going on this week? >> i think that there are continual conversations among central banks. that has always been the case. i think that would continue to be the case. but the meetings were not sequenced. it is a matter of accent, i think, a scheduling accident, they happen to be the same week. there will be a lot of discussion. but the monetary policy in the euro countries, as you well know, is quite different. different than in the u.s. >> if you were on the board right now, you would tell them to what do? >> i think if i were on the bother, i would say the market is expecting some action from us. let's determine what we can do. it seems to me that having some

movement into mortgage backs seems to me to be a likely outcome for today. >> what number do have you to come up with to actually impact the market? >> that may -- truly, if you want a number that really makes a difference, it would have to be north of 500 billion. i think it's more likely we'll see a movement in that direction and not a number put on the table. >> you know, this morning "the wall street journal" has an editorial that lays this out and basically says the central bankers at this point are the music men. they to want try to sell us another 76 trombones and that there's not much that can be used with any of this and eventually the rest of us will see that. how do you respond to that? >> i think in that sense they're right. monetary policy, becky, can only do so much. but there's a psychological opportunity here that they can work with. but i think that you will also see, therefore, in the statement, there will probably be a reiteration of the fact that if we don't address the

fiscal cliff, monetary policy can't do much to help. >> so congress needs to get its act in order first? >> and i think if you go back and look at the wording in chairman bernanke's statement july 17th, he made that point very strongly and very pointedly. >> i want to go back to the mortgage-backed securities issue. if -- if 500 billion is your number, how much of an impact do you think that would have? >> minimal. andrew, it is more -- it is more symbolic. it would have some impact on driving down mortgage rates, which will have some impact on the economy. also, i think that there is -- there is some sense there's only so much you can do purchasing treasuries. if you're going to move in the direction of a qe3, there's some support, i think, for moving away from increasing the purchase of treasuries. >> mark, i'm going to take you in a slightly different direction. it's politics, i think you saw yesterday the federal finance housing agency saying they will

not allow refis for those who thought could have done it with fannie and freddie. is that the right decision? >> andrew, i apologize. i didn't see that so i don't are an opinion. >> thought i would try. mark, appreciate you being here this morning very much. >> thank you for inviting me. >> krncnbc will have complete coverage of the fed decision starting at 2 p.m. eastern time. if you have any comments or questions about anything you've seen on "squawk," e-mail us at squawk @cnbc.com or tweet u us @squawkcnbc. there's a debate about commerce and taxes collected on that. plus, a top credit suisse deal maker. this man is about to be the millionth customer.

would you mind if i go ahead of you? instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. people don't like to miss out on money that should have been theirs. that's why at ally we have the raise your rate 2-year cd. you can get a one-time rate increase

if our two-year rate goes up. if your bank makes you miss out, you need an ally. ally bank. no nonsense. just people sense.

welcome back. u.s. equity futures at this hour are flat lining. at least they were. now they're up. that's interesting. the dow jones -- >> it was up that much. >> oh. i saw the 1.63% probably. >> probably. >> or the 0.63. they were up more than that a few minute ago. >> anyway, so that's not bad. i saw late in the session yesterday, we were flat. then by the end of the session,

down 64. >> 64 points or something. >> disappointing close, i guess. >> still, you've seen huge gains -- >> but still -- 13.008. let's walk you through the headlines this morning. one of wall street veteran merger advisers taking a new job. credit suisse co-chairman of mergers and acquisitions steve koch will become deputy mayor for rahm emanuel. he'll be joining us at 8 a.m. eastern time. also an obama bundler. i don't know if you saw the op-ed by senator jim demint in "the wall street journal." he lays out a case against internet taxation. we had dick durbin on the program last week, who talked about why we should be talking online retailers the same way regular retailers -- -- regular

retailers have to collect sales tax from you in the state they're in, jurisdictions they're in. online retailers have not had to do this. there's been a big movement that even companies like amazon and ebay have signed off on saying, okay, perhaps we should be paying some sort of sales tax as well, or collecting sales tax. the states already can tax you for this and they go after you in your taxes you pay in every year. make you sign up. new jersey's doing this. several other states are doing the same thing. his argument is that there's no taxation without representation. that was something that this nation was founded on. apparently, he's never lived and worked in the new york/new jersey area. if you live in new jersey and work in new york, have you to pay new york taxes for the new york state and new york city. it's been an argument i've thought for a long time. you shouldn't be taxed without voting in that jurisdiction. so if demint -- >> if you live in new jersey -- >> you live in new jersey and pay in new york you pay new york

state and new york city taxes. >> you don't have to pay over here? >> i live in new york -- >> really? you're a new yorker. manhattan type. >> work here and i pay -- >> you will be filing -- >> i filed in new jersey and new york for some of the taxes, but i think i get a refund. >> you do get a refund. if you live in new jersey, your taxes are lower so you end up paying that money to the state of new york and the city of new york. you get a rebate for some of your new jersey attacktaxes, wh never made sense because it seems new jersey should collect all of those taxes. by the way, that's taxation without representation. i've never understood that. >> i'm so confused. you pay city attacks too? >> new york state and new york city. >> all of these taxes got taken out when i was working in new york and living in new jersey. i got a rebate in new jersey. new jersey should keep that. >> i thought on the city one you had to actually have a residence

in the city. this has been a big debate from people who have apartments in the city and then they work outside and then they -- >> but the idea they can take my taxes and i can't vote about it? that's driven me crazy. court after court has decided that's okay. >> interesting. >> i've heard that term, taxation without representation. rings a bell. coming up, we'll head to chairs and "squawk" on some of offbeat stories catching our attention this morning. i have one that was a no-brainer for me, owning a german shepherd. unbelievable. first, let's peek in on the news room. see who's here, steven roach. we'll talk china, europe, and the domestic economy and domestic consumer. tomorrow on "squawk box," the ecb's decision on interest rates. closely watched u.s. jobless claims data, former fed president thomas hoenig, robert

wolf, and a first on cnbc interview with general motors cfo. it's three hours of "squawk box" you can't afford to miss starting tomorrow at 6 a.m. eastern. tdd# 1-800-345-2550 let's talk about fees. tdd# 1-800-345-2550 there are atm fees. tdd# 1-800-345-2550 account service fees. tdd# 1-800-345-2550 and the most dreaded fees of all, hidden fees. tdd# 1-800-345-2550 at charles schwab, you won't pay fees on top of fees. tdd# 1-800-345-2550 no monthly account service fees. tdd# 1-800-345-2550 no hidden fees. tdd# 1-800-345-2550 and we rebate every atm fee. tdd# 1-800-345-2550 so talk to chuck tdd# 1-800-345-2550 because when it comes to talking, there is no fee.

we're in the chairs. sometimes they need to scour through the paper to find something. >> not today. >> immediately i wanted to do this, prison guards are part wolf, all business. becky, i've had animals my whole life, dog, i love dogs. i finally got a german shepard, big one, long haired, most incredible animal that we have as a family. we have three dogs. she's just unbelievable, just athletic and smart.

those why those are the dogs -- i hope my other dogs aren't listening, i love you, too. i saw, this my daughters and son are going to go crazy on this. in louisiana, louisiana state prison, there's one called angola, what has had huge funding cutbacks, $135 million five years ago, down to $115, they've had to lay off guards. they have 5,300 inmates and more than half are murderers, have been convicted -- that's unbelievable that out of 5,300 more than half are in there for murder, have been convicted of murder. so they've had trouble guarding these guys so they got a warden. the warden's name, you can't make this you were, burl cane came up with this idea of a wolf dog staff of guards patrol at night. so he got a bunch of wolves and they're bred with malamutes with dogs so they're half wolf, half dog hybrids and at night they

patrol the fence. >> show the picture. >> here's the -- there's the fence, the dogs running along. they talk to one inmate in there for murder, lou cruz. he committed murder 1981. he said he and the other inmates are keenly aware of the four-legged security force prowling around the perimeter. he says you might run but they are going to catch you and no one has tried to escape as these wolf dog hybrids -- it almost sounds like a movie, a hollywood movie. >> show the picture again. if you see the dog -- when you see a dog like that, i don't go pet them. >> if you watch -- i would figure german shepherds would be okay but they even bred them would wolf it is do it. if you ever watch "cops," i watch a 1998 version of "cops" --

>> do they still do "cops"? >> oh, yeah. they do old ones. >> that was like original reality tv. >> whenever you have someone hold up in a place where you don't want to go in because it's a dangerous suspect -- did you ever see "i am legend" -- >> yes! >> with will smith. >> when you have tough work to do. the suspect will come out rather than deal with the dog. >> going with the wolf, there's an extra wild side where you think no inmate is going to be able to make friends. >> no one likes prison food. >> what happens if you become friends with the dog? there could be some -- >> that might be the wolf side of things. >> keep that from happening. >> and it's night and i think the dogs know no one's supposed to be out there.

>> but you think they practice biting? >> probably. >> should we talk about serious news? >> don't come over my house at night either. >> you have the dogs -- >> zahra will -- they naturally suspect the worst in people. they're not real -- they look at someone and they're going to think they don't like you first and you can maybe talk them into it after a couple of days. >> i can't get a dog, unless i get a little dog. you can't have a big dog. i feel like it's unfair to the dog. >> but then you got to get a little treadmill that carl has for lucky inside a little cage. >> does carl have -- >> no. >> he has a hamster. he has a little wheel inside his cage. takes him for a walk, puts a leash in there. >> he does not know that. you're totally making this up. i'll ask carl about this later. >> what do you want to talk

about? other news? >> no, go ahead. >> you want to talk gossip? my favorite venture capitalist ashton kutcher dating milas kuhnis now? that's page 6. steve rattner, you have to read this op-ed today. he talks about sandy weill in today's "new york times" says when sandy decided to split up the bank he said it's as if j john d. rockefeller proposed the breakup of standard oil and he goes after him and it's vicious. given that he's been a member of the obama administration, given that he's been on the democratic side of this, the fact that he's not pushing harder, he's probably in some way in the tim geithner camp on sort of the volcker rule and some of these issues. >> right. so it's coming not only from the right on this but on the left. >> on the left. when you think about how this debate ultimately unfolds zip

s -- >> i saw the news with sandy. i haven't thought about this. i watched sandy build shearson and he was held in very high esteem in the 80s and i know what happened at citigroup and i know how it turned out but he's a very talented executive. didn't turn out well. >> even the association doesn't agree with his standpoint on this but they say he's somebody you have to listen to. >> i give him credit for being willing to change his mind, even if he's not necessarily suggesting that he had a different view of what happened 10, 20 years ago. >> he turned american can into city group, after he sold shearson. he's pretty amazing. >> when we come back, we have the adp report coming today. plus we're going to be welcoming a squawk master to the set. stephen roach joins us to talk about china, europe and saving the global economy.

we'll be right back. you see exactly where your money is and what it's doing live. our e-trade pro platform offers powerful functionality that's still so usable you'll actually use it. and our mobile apps are the ultimate in wherever whenever investing. no matter what kind of investor you are, you'll find the technology to help you become a better one at e-trade. you'll find the technology to help you become a better one it's something you're born with. and inspires the things you choose to do.

you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. to experience the largest, most efficient line of luxury hybrids on the road, including the all-new esh. ♪ while many automakers are just beginning to dabble with the idea of hybrid technology... ♪ ...it's already ingrained in our dna. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection.

from the economy here and abroad to the fed's next move, squawk master steven roach is here to talk about what's at stake for your money. >> focusing in on the markets and what investors need to know. >> i really see a much higher likelihood we're going to be at a 275 year rate rather than 395. >> how what he's saying today could safeguard your investments. >> and larry meyers is going to be weighing in ahead of what could happen on today's meeting.

the second hour of squawkrtrigh. welcome back to "squawk box." earnings coming in now from our 51% parent comcast corp. 50 cents a share is the bottom line number we're seeing versus an estimate of 48 cents a share. you know with companies like comcast we're going to be looking at cash flow numbers. but as far as the bottom line, 50 is 2 cents ahead on the revenue number. it is $15.2 billion and that is in line with where the street was. here are some of these other numbers. total consolidated free cash flow in the second kwar was $1.55 billion, a gain of 2.2% but above the street estimate of 1.4 billion. total consolidated operating cash flow increased 4.2% to $5

billion. and then if you were to look at some of the highlights of the different businesses, obviously there's nbc universal, which we'll get to in a second. but the company, a lot of the bread and butter is still in the cable division. and you look at all kinds of metrics. you look at how many ads they get in total video, high speed and voice, the ads were 138,000 in the second quarter, an increase of 40.1% over what they added in the year ago period in the second quarter. high-speed internet up 8.4%, which is 156,000 compared to last year's 144. most of these numbers are quite a bit above last year. and up also look at video customer losses and those are not as bad as in the year ago period. 162,000 versus 238,000, better than some of the other comcast

competes against. >> they are not cutting the cord the way some people anticipated. not on comcast but more broadly. >> people are going to look closely on nbc university. nbc universal revenue was essentially flat. it did decrease less than 1%, 0.8% to $5.5 billion. operating cash flow decreased 15.4%. that doesn't sound like a very good number. they're attributing that, the company, to a combination of f tough comparisons related to conflict licensing with netflix and nhl and nba programming expenses and i guess the film business underperformed with "battleship" is sort of the -- >> you sunk my battleship! >> battleship sunk my network! no, it didn't. >> the chairman and ceo of co

comcast points out one of the things they're doing it to look at the foundation for continued momentum and high speed. they talked a little bit about the comprehensive olympics coverage, it's the most comprehensive olympics coverage ever. there's going to be questions of people looking at this. they raised $1 billion off of this and they expected to not make money because of how much they're spending but the ratings have been pretty strong. now they'll wondering if very strong ratings will end up that they do make money. >> here's for example cable revenue network, that increased 3.6 billion due to 6.8% increase in distribution and advertising revenue but operating cash flow at the cable networks was down 6.8%, reflecting higher programming and production costs due to nhl and nba programming costs and increased investment in original program and

broadcast tv revenue, which as everybody know, the network itself is problematic and any type of turn around there would be material to even comcast. they have broadcast tv revenue decreased 9% in the second quarter to 1.5 billion due to lower revenue from a content licensing agreement assigned in the second quarter, broadcast operating cash flow was up -- >> because of the o & os. >> and team parks continue to do well. >> which says something about the consumer. >> no! >> no? >> no. >> steve roach is here. we'll talk about it. >> it has to do with ticket prices. that's what it was at disney. they were able to raise ticket prices. >> it also has to do with you put up something like "harry potter" and it's still hot. that is still when you go down there, it's shoulder to shoulder at harry potter. >> are they breaking out "squawk

box" from the comcast -- >> they haven't broken that out. i'm going to hang my hat on the cable network revenue increase and think we added to that. we had nothing to do with the decrease in operating cash flow but i don't know. >> i just had some food in the green room. i understand that. >> are you the one that needs the corn -- >> that's byron. >> stephen even knows who that is. >> i worked with the man for 20 years. >> the whole show is different if he doesn't get his corn muffin. >> our guest host for the next two hours is steven roach, seni senior fellow at yale university. the huge issue today is going to be the fed. you say we should stop expecting so much as the market because this continued qe is like crack coming from the fed.

>> i probably shouldn't have used that word, becky, but let's look at the record. they've done qe 1, qe 2, twist 1, twist 2. soap that's four actions of unconventional monitoring policy. one of them worked, qe 1. the others have not worked. now, the fed puts out research to say they all work but it's propaganda. they're batting .250. if you were a baseball player batting .250, you'd get sent down to the minor leagues. >> if you hit for power -- >> is ben bernanke mark texeira? >> that's what got me off on the wrong step. this guy we had on earlier told me we need a lot more help from the fed to keep things going. i said four years after -- >> i disagree, joe. >> and the private sector's fine, it's just the public sector. >> that's ridiculous. >> that's what i thought. consumer demand has grown 30.7% now for 18 quarters in a row, four and a half years of the

weakest consumption growth in the modern history of the u.s. economy. and in the current quarter, the third quarter, we're tracking below the anemic 1.5% gains of the second quarter. the consumer is not benefiting from qe 1, qe 2, twist 1, twist 2 or whatever the fed announces today. >> they could actually being hurt by it. >> the counterfactual is where would be we be without it? >> andrew, with all respect, this counterfactual stuff is ridiculous. there's no one shred of evidence to say the counterfactual says we'd be in a depression or ongoing recession. consumers are in a balance sheet adjustment period. they need help fixing their balance sheets. you asked the question earlier to mark sole son about this action that was rejected yesterday by the fhfa on the

debt forgiveness of underwater mortgages. that was a mistake. that's the type of policies that should be put in place along with saving incentives to give consumers a better sense of financial security in the future. >> why do you think that decision was made by the way? >> politics. >> i think obama wanted to do it. >> geithner protested the action and didn't want to do it. there's this big ethical issue. people don't make good on their mortgage, why should you let them off the hook if the next door neighbor is paying his mortgage all along. >> becky waited and waited and waited to get -- >> we've had this conversation. >> it rewarding good behavior is what you'd like to see instead of rewarding bad behavior. >> there's a way to deal with this and this is a proposal that

was made by marty feldstein of harvard and that is if you've going to give consumers debt forgiveness, convert their loan from a non-recourse loan, which means they don't have any obligation to the home to a recourse loan. in other words, if they screw up on this new debt that you're going to give them, you can take everything, including the family jules, the car, the kids' education. >> you can refinance very easily if you're not somebody who necessarily need it is. if you could really be helped out by refinancing and lowering your mortgage, you can't. >> i think that's a tough question. i mean, banks are part of it but when people apply for a refinancing and the appraisers come in and assess the capacity of the home they're in to refinance, they find out that the home is worth 20%, 30% less than it was three, four years ago so they don't have the capacity to borrow against the assets.

>> these people are trying to make their payments, they continue to do it. everybody else in the globe can get these incredibly low interest rates. i called up yesterday and was able to qualify for a lower mortgage like that. >> did you get it? >> yeah, i did. i locked it in yesterday. but you know what, how come people who could really use the help on that can't do that? it's infuriating that people who need the help most aren't able to get it. >> but you're on the right issue here. qe3, if you they do something today or next month or whatever, doesn't even touch this problem. it's like spraying the landscape -- >> but it means the people who don't need the help are the ones most likely to get it. >> when you have a balance sheet recession, you need to go after the problems that are impeding a balance sheet. excess debt and inadequate saving are the top two issues on that agenda. and our policies are not addressing that period. >> so what could happen aside from marty feldstein's plan, is

there anything else that legislators should be doing right now? >> i think in contrast to some of the people that you've had on this show that we really need to have an active debate about building a long-term savings agenda for the united states. consumers who are trying to boost their savings rates up to 4.4%, the precrisis norm is 7.5%. people doesn't have a sense of security about the future. so why don't we have a debate, not about forcing people to save today -- >> you can't force them to save when interest rates are zero. >> in many ways we're trying to do the opposite, get them to spend. on the way to getting to your 7%, the pain is ksh right? >> bern can key and his friends are saying we're going to put together in place very grease monetary policies. you should use the new-pound wealth to go out and spend again. consumers are telling him he's nuts. consumer spend being growth, 18

quarters, four and a half years. this is not a forecast. this is a reality check. the growth rate is 0.7%. there's never been a period of weakness in consumer demand like this. consumers need to foe what they have to do to repair their balance sheets. they just need more help from poll signatureses and regulators in washington who are looking the wrong way. >> stephen is going to be with us for the remainder of the show. >> and coming up jeff kronthal joins us next. ttd#: 1-800-345-2550

ttd#: 1-800-345-2550 let's talk about market volatility. ttd#: 1-800-345-2550 in times like these, it can be tough to know which ttd#: 1-800-345-2550 way the wind is blowing. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-345-2550 talk to chuck. ttd#: 1-800-345-2550

. we're back. let's recap the earnings out earlier this year.

harley davidson earnings beat the street this morning. the company pointed to success attracting young motorcycle buyers. are there a lot of young people buying motor cycles these days? >> not harleys. >> they're saying that's what's doing it. >> joining us is jeff kronthal, a merrill alumni, right? >> yes. >> last year jeff made the call rates would stay below 3% for at least a couple of years. you've had some good calls in the past. tell me what will come out of the fomc. from what i can tell, you don't think they're going to immediately say they're doing qe3 but they're getting incrementally closer to doing something you think in september? >> well, i think maybe in september. again, the politics of it they very well may delay it until post-election. i think they want to stay out of

politics. but the economy is relatively weak. i think what we've seen from the fed means we'll see more qe in the future. >> if you have a dual mandate, it's not a criticism of your view, it's the criticism of a dual mandate. they should change the mandate. >> they're running in place. i mean, what are they doing? they're not accomplishing anything. >> if you're at 8.2% and one of the things you're supposed to worry about is getting it down to 35%, you're going to think you're totally entitled to doing things. >> becky pointed out earlier, read the lead editorial in the wall street journal today. >> how about the ecb? what are they going to decide on thursday? >> i think the ecb may lower rates a little. i think they probably will

continue to do smp. they never officially stopped it. the key for the ecb is they're stuck in a spot where they have to effectively say they have to say they're not going to create seniority because they're subordinating the current bond holders and making things worse. they don't have the authority to do that yet so they certainly will say it's one off and we'll consider it every single type. >> does that mean they all have to take a hair cut together, including the ecb? >> the ecb will realize they may have to take a hair cut. if you're doing ltro and the banks got g out and buy government debt, it's just compounding the problem. >> what do you think the market is actually expecting out of ecb? what's going to disappoint the market if we don't get it? >> probably not as much as draghi said but they have to talk about more asset purchases.

the key is there is liquidity. this is a sol vens vency proble a liquidity problem. i think they've got to get something on the table. i think it will be disappointing for the market if they don't talk about some sense of at least one off when it comes to smp purchases. >> six are now in recession. draghi has really promised the ranch here but is it going to deal with a recession in europe? >> ultimately this is a political issue. they've got to become more competitive. you've seen the euro drop 15% the last three years and you have economies that are shrinking. the core problem in europe is just the leverage in the banking systems, how big that is. you know, you look at the u.s. and the banking system is 83% of

gdp, france it's 420%, you look at europe the eu as a whole is 365%. they obviously have to shrink the banking system right now. in the middle of shrinking the banking system and in the middle of doing austerity, i don't see anything the ecb can do that in the long run is going to help. this is a political issue and creating competitiveness. >> it wouldn't help to print then. i thought it was inevitable they print. my question was who needs print more, us or them? >> sounds like it's a race to the bottom. >> there's no doubt they need it more. >> then the euro is still overvalued? >> we think so. we think the only way of creating competitiveness is dropping the euro significantly.

>> to what? >> parity. parity is possible? >> there was an op-ed in the ft while you were out that said they need to act more quickly to push the euro down, but then we talked to jim o'neill who said the flip side of that is it creates much bigger problems with the yuan in china and they've allowed the yuan to start rising again. that's putting pressure on the united states. >> i don't think it would be a simple step down to parity. if you try to do it quickly, you're going to have questions, whether china and even the u.s. can tell rate that. look where our growth is and can we tolerate our lack of competitiveness if we go to parity. i think the world is going to --

we think there is a lot of value in the structure products. you've had housing imapproval, no commercial real estate built in the last three, four years. you have relatively attractive underwriting standards, you have a market that's shrinking. i think there is a lot of value there. and honestly we're short france. we really think france has a lot of great optionality at a little over 2% on the ten year. we're not really sure how europe solves a problem. france's banking system is huge. it's got a lot of -- it's got the largest loan-to-deposit ratio in europe. it's, you know, got the negative burn account balance versus germany with a very positive one. >> jeff's made some very good calls. >> all i know about china is synchronized diving -- >> they are on fire!

>> they're taken from their families when they're a year and a half and they've been diving like from 2 on. >> everything is synchronized in china. >> it is. >> when they jump into the pool, no splash. >> it's like i'm seeing double. i wouldn't even show up if i were an american diver. >> we've done pretty well. >> you're not going to get a gold. >> maybe not this this time around. >> still to come this morning, he's helping companies to do business overseas. we'll talk europe, china and more in just a little more. >> time for aflac's trivia question. which country celebrates its national day on august 1st? the answer when "squawk box"

continues. ?-új%!4 huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at aflac.com. plegh! it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. ask me. is just fine...

ask me what it's like to get your best night's sleep every night. [ male announcer ] ...why not talk to someone who's sleeping on the most highly recommended bed in america? it's not a sealy or a simmons or a serta. ask me about my tempur-pedic. ask me how fast i fall asleep. ask me about staying asleep. [ male announcer ] these are actual tempur-pedic owners. ask someone you know. check out twitter. try your friends on facebook. you'll hear it all, unedited. ask me how it feels after 10 years. ask me if it's a good value. just ask me. [ male announcer ] there are over 4 million tempur-pedic owners. and they're more satisfied than owners of any traditional mattress brand. ask me why i feel better every morning. ask me why someone who's never had an ache or a pain is in love with this bed. [ male announcer ] start asking real owners. ask me how we took the first step. ♪ [ female announcer ] for more information or to find a retailer near you, visit tempurpedic.com. [ male announcer ] tempur-pedic. the most highly recommended bed in america. is now within your grasp with the e-trade 360 investing dashboard.

e-trade 360 is the world's first investing homepage that shows you where all your investments are and what they're doing with free streaming quotes, news, analysis and even your trade ticket. everything exactly the way you want it, all on one page. transform your investing with the e-trade 360 investing dashboard. now the answer to today's aflac trivia question. which country celebrates its national day on august 1st? the answer: switzerland.

>> aflac! >> squawk reserve is in session. larry meyer joins us to talk about the fed's next move and chances for qe3. squawk will be right back. it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense. this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination...

and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. well another great thing about all this walking i've been doing is that it's given me time to reflect on some of life's biggest questions. like, if you could save hundreds on car insurance by making one simple call, why wouldn't you make that call? see, the only thing i can think of is that you can't get any... bars. ah, that's better. it's a beautiful view. i wonder if i can see mt. rushmore from here. geico. fifteen minutes could save you fifteen percent or more on car insurance.

welcome back to "squawk box" this morning. making headlines, mortgage applications rising by 0.2% in the latest week. the number of people applying for mortgages to purchase a home had dropped but demand for refinancing is now edging a bit higher. time warner's earnings beating the street by a penny, though revenues fell a bit short. and the automakers will be reporting monthly sales today. analysts say the sales likely remained at a healthy pace last month, suggesting summer clearance deals could have trump buyer concerns about the economy. >> joining us from washington is larry meyer. he is former federal reserve board governor. larry, good morning.

>> good morning. >> what do you think the fed is going to do today? >> i'm going to give my views on that but i want to along the way tell you why i completely disagree with virtually everything that stephen roach said. >> oh, my gosh. we were waiting for this to set up. >> i used to be a client of yours, come on. >> you're not anymore so you don't get any sympathy. >> you got to do the contrarian thing. larry probably allowed you to make all the right determinations. >> we like to have fun. look, as mark olson said, i can't remember a meeting when there were so many options that the market was on the table, from doing nothing, extending guidance, qe3. we think there's only one thing on the table today, do nothing or extend the guidance. extending the guidance is a very simple -- it's almost a technical story here because the guidance by nature has to be adjusted when the forecast changes.

it's very -- it's different from what it was when they first implemented that guidance through -- at least through 2014. we think that's what will happen. it's a kind of slough move, keeps the fed in the game. they view qe as a high-cost action, much bolder, something that is not -- they're just not ready to pull the trigger there. and ior has incredibly uncertain and potentially large cost to it. >> before you started i turned to steve and said larry meyer is coming here, you disagree with everything he says diametrically and you got to attack, attack, attack. and then you came on and said that. but you know what he said about you? he said, "ah, he's a typical fed guy." which is the worst thing you can say about someone.

and then i said worse, i think he might be a keynesian. he said ask him. are you a keynesian on top of everything else you are? >> in the short run the economy operates in a keynesian fashion. you increasing a congratulate demand, you stimulate the economy. in the long run we're classical, we're supply side. so it depends on -- let me tell you what i i don't agree with steve about. first of all, he said that qe is just not effective. and he said that counterfactuals don't matter. it's all that matters. we can't know where the qe worked, we can't know where the miss call stimulus worked unless you have models. you don't like models? then you don't note the effect of any policy that the government or fed can do. >> what i do know as big a sector of the u.s. economy, the consumer, 70% of the gdp hasn't grown for four and a half years. we've had qe 1, qe 2, twist 1

and twist 2, where's the beef, larry? if your policies are so effective, why aren't the consumers responding? >> let me ask you -- >> you're not answering my question. >> i'm going to answer your question in a very good way and i want you to see if you agree. so the republicans say, look, obama passed this big stimulus, the economy got worse, it didn't work. that's nonsense. it's only the counterfactual, what would have happened without, we make pro projections, we use models. we don't know. we estimate the impact on rates. >> what happened to christine romer's model that said if we did that stimulus, we'd stay below 7%. >> that's easy! come on!

>> we don't want any economic models building bridges, launching missiles, doing brain surgery. you guys can play around with this but hopefully -- >> if you take that point of view, you say i have no idea what any policy would do. put an incentive on saving. have no idea what that would do before or after because he doesn't do empirical work and doesn't look at theer red call and he says that you can -- >> sure this has come down, joe, but the dead loads, dead-to-income ratio at american households is still at 115% of income versus a 75% average of the three decades of the year. that's an empirical observation.

>> but listening to you, it's so dangerous to hear. can you justify anything and you can put in assumptions and it just scarce me to think -- you know, what you're going to live by the sword and die by the sword because the other side as all these counterfact oouls as well. if you hadn't done obama care, if you don't -- >> if you don't have models and do empair california work. so what do you do? er. >> owe. >> nobody knows what the root model is. we have a model we have confidence in. >> i got john taylor's model,

who's right? >> we think we're right. don't tell me you what happens without taking account what would have happened without the policy. nonsense. impossible. >> larry, have i huge respect for you about what you're saying makes absolutely no sense. mark your models to market in light of what the economy has done over the four and a half years, past four and a half years, the traction from monetary policy has been the major disappointment of this so-called post-crisis recovery. so it's time to take a really hard look at models that are based on the assumption, and i say this is an assumption. there's no science to what you're saying, larry. >> course there is. there's art and there's sign. >> what s your -- you have zero

sides. you're flying blind. >> i'm looking at what's going on, larry. >> no, that's just terrible! >> it's terrible to look at what's going on? >> no! absolutely, no. >> you need to go out in the real world. >> absolutely not, absolutely not. >> if this is something you did when you were at the fed. >> ooh. >> what do you know? we made a bad forecast. the economy was deteriorating more than we expected. as a result the economy worsened but it would have been worse. how do i know that? i don't know that. i can't know that. the only way can you intelligently talk about in a is if you have a model. if you ignore counterfact uls you're out of the game. >> candidate you also say while you were at the fed working with the great maestro that you were

far too easy in your monday f fri -- that got us to this place. inappropriate monetary policy can blow up the economy. >> wait a minute, did you read my papers? who won the fomc? who is the only one who wanted to tighten. do you know that? >> i think it was larry lindsey, right? >> no, it was me. >> i give you big credit for trying to do that but obviously you and larry and lid say and. >> the counterfactual i was talking about, there are those on the side that look at all the -- even alan greenspan, that

has been the primary hindrance of being being back done to 6% unemployment and 3 or 4% gdp. their counterfact you'll is without all this activism, the economy would be doing just fine. >> absolutely. absolutely. that's politics. of course they're going to say that. >> then we're going to get bogged down in counterfactuals. >> at least we're doing the right thing. they're saying total politics, hey, obama did this, wrong. obama can say anything and redistrict the results of the -- maybe we don't get it right. maybe our models aren't right. we made some big mistakes in forecasting. that's an issue to be sure. but we're doing it right, okay? we're doing it right. >> the question is will the fed,

if it continues to do things, be effective. and that's what the wall street journal op-ed brings up to date. the quote is sooner or later we'll discover the money illusion can't save an economy from its more funt at problems and they may even interfering with the growth. bernanke said he would like to seekonk and the fed step in. >> there's very little the fed can do. the tools, they have relatively little effect on the economy. we have to estimate what the effect is and say it was zero or it had a bad effect on the economy. so it's true. fiscal policy, okay, that will help but we don't have fiscal

policy so let's not go there. >> you disagreed with a major policy -- that is the fed has been impotent. >> did i say impotent? >> the fed alone can't get the job done. bernanke has said that. greenspan's work about the long-term investment has been hurt. you're just saying his model and all the conclusions that he grew, it was government october vich -- >> you're saying it's all just politics. >> who created the uncertainty? we have an incredibly dysfunctional system. >> yes, we do, yes, we do.

>> thank you for joining us today. >> it was fun. >> great debate, great conversation. coming up, the business of globalization. the man who helped aig become a powerhouse in china joins us after the break. i'm the second owner. the what? i will own this car after you. look, i'm not telling you how to drive our car. our car? if you're gonna have a latte in the car, keep a lid on it. it's a cappuccino. still needs a lid. [ male announcer ] the highest-quality cars plus an exceptional certified pre-owned program. good news for the second owner. take care of my car! [ male announcer ] experience the summer of audi event with 1.9% apr for 60 months and a complimentary first month's payment ertified pre-owned audi models. [ male announcer ] how do you trade?

with scottrader streaming quotes, any way you want.

fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.

>> joining us is ned cloonan, former vice president at aig, advising foreign investors and accessing the u.s. market. i see you are prepared at this point, ned, to answer that question i've asked many times, that if -- through the whole finance crisis i've gone back to elliott spitzer and said if he hadn't wanted to be governor so badly, if he hadn't wanted to do that and hank greenberg had remained at aig, there may not have been all those derivatives, the cd credit defaults written without any money being put down and that was a linchpin in the whole financial crisis.

will it have still occurred with bank greenberg there? >> i've thought about this carefully and i've had some time. my opinion would not have happened. we would have had some losses but that portfolio would never have been allowed to build the way it did. >> because it he would have been all over it? what would have happened? >> i was there when we first got into that business. i know his motivation. we had a triple a ratings and there were only a handful of companies in the entire country that had that. we weren't making the growth targets we wanted. he knew he was introducing something very different to aig. >> andrew, you've got the book that defines everything. but whenever i've thought about it, if s&p and moody's weren't able to fall back on the insurance written by aig, they

would not have rated them triple a. and i know fannie and freddie were a key in all this, too, but without those 300 guys in connecticut, i don't see how it could have gotten to the point where it got. >> do you think it's all connecticut, by the way? some people would argue there were other parts the business faltering as well. >> basically it was all connecticut. hank greenberg knew this was the only place in his entire operation that could bet the house, it needed to be managed, he needed to know what that portfolio was. you knew to him you could never say never. never say never to me. if someone came in to him and said these derivative portfolios built on real estate, real estate will always go up, he would throw the guy out of the office. >> but what does that say even

about the business itself if the one guy isn't there to mind the shop, he could have been taken out for a number of different reason, whether he left or something unforeseen had happened, what does that say about the business itself if that one guy isn't there, it can blow everything up? >> fair point and i think that will be the legacy, that will be the challenge of his great legacy. at the same time, like any sport, you have to step up. it was a failure in leadership, ffs a breakdown in the culture and it unfortunate because -- >> was it a failure in firm-wide risk management? >> it's interesting because once you left, the interesting this evening is that we had more committees, more meetings, more major risk committees formed to deal with these issues and it ended up missing it or more

importantly there was no system for accountability because of all of that as well. so there was a cultural chang. it happened quickly. it was a great lesson for me. >> that worries me about a lot of the big banks. if the absolute one person isn't there, what happens to things and how do you protect that? >> you should be able to. like an athlete that's been on the bench, you get into the game, you got to perform. we're professionals. it's not impossible. >> ned, now we have about a minute for you to explain everything that's happening in china -- actually 30 seconds -- and argue with stephen roach about it. i thought it was interesting you were willing to answer that question. will you come back to talk about china and how to -- >> yes, absolutely, yeah. >> but i wish you'd be here when we were doing it. >> i'll come back. >> we're talking about trusting the chinese and just how it

works. >> they can dive. that's all i know. i've seen the synchronized diving. >> the economy is bottoming out. >> the fed wrappup atwo-day meeting. the adp report is out at 8:15 and key housing data. >> guys and joe in particular, we are bikini hunting this morning. we're at the home of beach volleyball, one of the more impressive venues at the olympic games. a temporary structure built n 36 days. even though there's a chill in the air, we have seen a bikini or two. i take some of the pressure off. he takes some of the pressure off. she's a fierce competitor. when you meet sanya for the first time,

you better tighten up your skates. thanks coach. bp is honored to be part of the support network for team usa. the team that stands for us all. why? i thought jill was your soul mate. no, no it's her dad. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a killer investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man.

i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the e-trade 360 investing dashboard.

it's time for our olympic fix. carl, it's been an incredibly exciting time for america. you have phelps, you have the women bringing home the gold. good stuff. >> what an amazing night, becky. michael phelps has always said he wanted to do something no one had ever done and, as you said, he's now the most decorated olympian of all time, took the silver and 200 meter fly. that's an event he has not lost internationalally in ten years. he was just outtouched by south africa, gold in the 200 meter

rely brings his total to 19 medals. >> you mentioned gymnastics, the fab five winning gold for the first time in 16 years, an absolute blow out. the biggest margin of victory in 52 years. a lot of tears for jordyn wieber and gabby douglas and so forth. the medal board looks like this. u.s. just went into the lead, 24 versus china's 23, france has 11, south korea with 8, great britain finally gets some gold with 6 total and one gold in rowing. later on we have two great stories. one is a small business, joe, you might have heard of called loud mouth, they dress john daly, very brash patterns. very loud. we're going to try to put your

face over john daly's. we're going to introduce you to th 16-year-old, warren buffett and bill gates, who she calls uncle warren and uncle bill. we'll talk about where warren's game is right now. i know, joe and andrew, you guys consider yourselves table tennis savants. >> i played her in omaha twice. i got a couple points off her. >> she let you get those points. i watched. >> did you get hit in the lip? >> yes.

it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.

what ? customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank.

no nonsense. just people sense. jobs in america. we're counting down to the adp employment report at 8:15 eastern time. >> from private banking to public service, credit suisse talks to us about joining rahm emanuel's team running chicago. >> we have a full tank of gas, half a pack of cigarettes, it's dark and we're wearing sunglasses. hit it! >> our disrupter series

continues. >> once you're out, you're out. there's no coming back. >> well, i would definitely like to stay inside the circle. >> and we'll talk to a co-founder of the future of the social network. the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our guest is stephen roach, former executive chairman of morgan stanley asia. you're a professor but you're not tenured. is that it? are you any good? >> well, we'll see. >> when would you be able to coast? is that down the road? >> he comes from wall street. they're never going to give him tenure. >> who knows, joe.

i'll be in my third year of teaching at yale. they've asked me to come back. we'll see how it goes this year. >> are you looking for a tenured position? >> no, no. i'm just looking to make a contribution, teach young people. >> and you are, here. >> i'm trying. >> you're teaching me. >> i had andrew up there last year. he gave a fantastic talk to one of my classes. >> you're an ivy league guy through and through. and i've heard, they say easier to get into, actually need to work once you get there. they don't just present you with as like some of these places. equity futures up about 41 points. >> policy makers are wrapping up a two-day meeting. they say the central bank is ready to act against a weakening

economy but it will stop short of aggressive measures. coverage and analysis on cnbc start at 2:00 p.m. >> and we're just a few minutes away from adp's moumt numbers. frsers said the economy probably added in washington, congressional leaders announcing a stopgap pack. also we've had earnings news this morning. comcast reporting second quarter earnings of 50 cents a share. that was 3 cents above expectations. revenue came in in line with expectations but comcast, which is the parent company of nbc universal, also they look at consolidated free cash flow, 1.55 billion, above the street's estimate of 1.4 billion.

>> rahm emanuel has named his new deputy mayor this morning. his name is stephen koch. he is vice chairman and co-chairman of credit suisse's merger and acquisition group. good morning, deputy mayor. >> i would hope you start treating me with a little more respect, andrew but it's good to see you. >> you've been on wall street for a very long time, one of the long-time deal makers in the business, worked under bruce waser team been you're leaving i'm curious, do you ever think it's going to come back? >> yeah, i absolutely do. i think -- i've seen a lot of

ups and counsels have there have been markets i've been in that have seen worse than today. i think of the the main tools companies use to grow and expand and adapt to new circumstances still exist. what you have right now is a market that is a little bit uncertain about what the future is. when people make massive inve investments they like to have some certainty about what's happening in the future. that is a little weaker than you'd like to it to be. >> so you were a master of the universe. do you think that title there will be a time again when there is a lot of there is more concern in markets.

>> you've been a bundler for obama historically. hard to do that in some cases in this environment given the way many of your colleagues feel about the president. i wanted to read to you this morning, a hedge fund manager who used to be a democrat in support of obama. he said "the obama administration is openly hostile to most businesses and unable to articulate policies to reduce unemployment. what do you say to that? >> i have a lot of respect for can. i think he's just wrong. i think he's one of the more brilliant guys -- maybe the most brilliant man i've ever metn american politics, second to chicago's mayor of course. >> good call. >> i think he's been tremendous

for the environment. what you look at what happened and people forget where we were financially and where the economy was -- >> i don't think nen's forgotten that, steve. i've been told so many times about what he inherited. i remember that -- i know but nobody's forgotten, believe me. you do realize we're at 8.2, there hasn't been a single month where the unemployment rate has been below where it was at inauguration day at 7.8%. not a single month and we're going to probably do the round trip to november where we still may not be below that. that doesn't say anything about the job that the private sector's been handed? >> i think what it says is we had some really intractable problems and i think you have to look at the progress that's been made on them. >> we had some intractable problems back in the 80s.

>> reagan came into the problems after the recession of '830oned 82? >> absolutely. i have a lot of friends who were republicans, came supporters of the president the last go round. i worked with a lot of them. i have enormous respect for them. i think they were not necessarily natural democrats when they supported the president the last time. i'm not surprised they're less enthusiastic this time. i continue to think the president represents the best alternative that's available to the american people in terms of moving the american economy forward. >> go ahead, becky. >> steve, can i just follow up on that. you said there were a lot of people who supported the president who probably weren't naturally democrats. reagan had the same thing with the reagan democrats supporting him. where do you think things will fall in terms of the voters. it's a close race.

do you think there were a lot of people who were drawn to president obama first time around who might not naturally be inclined to vote for him a second time around? >> well, you know, i read the ,ap papers you guys do i can take it pretty even to slightly ahead of governor romney. what fascinates me, i don't meet many people like this, but it fascinates me 8% or 9% of america hasn't made up its mind yet. >> the president ran on being a unifier and the kind of kang g

eng. >> oh, look, i don't think as american a americans -- i'm not political expert. i take it that's not what people are interested in. it certainly isn't what seems to be what is -- what the media portrays. you know, i think you got to look underneath and take a look and see what you think people are going to do, how think has the best ideas and programs to move us forward and i continue to think that's the president. >> steve, you're about about to become a political expert. let's talk about the communities and challenges in chicago. what is the biggest issue and

how do do you it? >> i think the great challenge that anyone faces in the world is to ensure that chicago is a great city and success fl city in the -- we have lived beyond our means in most cities and in the states. and in the country i think one of the reasons i'm taking this job and really excited about doing it is i think the mayor is extremely committed to being serious about having fiscal responsibility. >> he's privatizing everything, steve. he's like a tea party guy. >> he's got steve there to make some deals. >> don't talk him out of this conversion he's had, now that

he's actually got budgets to balance and cities to run. let him go. >> hey, steve, we got to run. congratulations on the appointment. we'll see you soon. >> when we come back, we have the adp report. ahead of that the dow futures. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.

tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-800-836-8799.

welcome back to "squawk box," everyone. we are just seconds away from the adp report. steve liesman has the numbers we've been waiting for. >> adp reporting job growth grew by 163,000. nonnarm payroll is expected to be 95,000. private sector is expected to be 100, 110,000. a couple of the keys here that we'll be asking joel about in just a second, the significant miss last month. last month they predicted 172,000 and came in at 84. >> that was seasonal? >> you know what's amazing, steve, is the market's reaction to this. it can't figure out what to do. it's ticking up, ticking down. they don't know if they want

good numbers or bad numbers. >> they don't know whether they're totally wrong. >> can you put up the chart by business type. small business adding 73,000, medium business up. large business up 23,000. >> joel, let's talk about how much we ought to be thinking about. overall what i calculated in the last six months or so, you're about plus or minus 50. >> last month the adp estimate was a tad high.

we'll get a few more revisions on last month's number so the gap could close. but my sense is this isn't be the first time the adp number accelerated or decelerated ahead. it happened last winter. we got another reading today like the reading last month which shows okay employment growth but not near live fast enough to diggous out of the hole we're in. >> this enough, if it's true, and you probably want to take off somewhere between 10,000 and 15,000 to account for government shedding workers, which is still going on, but it's low enough to ower the unemployment rate, joe. high enough to lower the rate. >> it high if we had typical growth. >> we were surging in the first part of the year and then we

came down far further than anyone expected. >> i first of all, i think part of the surge and part of the retrenchment after the surge were driven by seasonal factors and now we might be settling in to something a little closer to the underlying trend. what this tells me is the labor market is recovering only slowly. the economy is growing lethargically. we monthly gains two to three times larger than this for the second period. >> i think that's a really good point. we're talking about plus or minus 70 when the real impacts would come if we're plus or minus 170. what types of businesses added jobs? the service sector up 148,000. are those good numbers by themselves, joel?

>> the rebound in manufacturing employment is i think par for the course at this point of a cyclical recovery. most of the employment in the united states is in the service sector. so in order for our economy to be growing nicely, we have to see gains in the service sector i'dable. >> steve? >> just one question, it usual no. >> that is an excellent point actually. the economy decelerated in the middle of the year and unless it reaction sell rates, the pick up in the employment that the adp data is showing, it would be at odds or tension and there would be less data. i'm looking forward to seeing the revigs to the recent data and the friday number. >> let's bring in rick santelli

for market reaction to this as well. rick, it's kind of surprising, at least watching the futures, how there's not much reaction at all, despite the fact that this is a prizing number. >> you nailed it. i heard you speaking a few minutes ago. the equities going into this were up 36 in dow futures, we were up 3 in s&p futures. it has vacillated a little bit higher but you're correct. i'm not sure if it's a positive to the fedora sad commentary on just the state of affairs, that the wek wits would debate on whether the investors wand a baddour good number. we did get one basis point in the curves. so 148 to 149. the euro currency didn't move enough. this is an important number but it might be more important against the ris of -- risk.

he said the fed stimulus package is like crack. what do you think of that? >> traders aren't sure what they want to do. they just want to make money. when steve has these polls, they're very enlightening but i cause are people putting their brain or their wallet in terms of do they they we need qe, do we want qe? it gets very complicated. >> i wanted to point out that nobody has a lock on figuring out what the government is going to report on friday but i did want to -- >> can i jump in here?

>> go ahead. >> i think the overall feel is that the labor market hasn't fallen out of bed. initial claims, for example, have been bobbing around at a loaf point now and consistent with moderate growth and employment going forward. i just want to come back to this point with the kind of economic growth that we had recently and are rooking for in the second half of the year between employment now and an employment we would enjoy, we have to have number far -- >> becky, my read of the markets is that at least in the medium term, the market is not conflicted about what it wants. i think today, tomorrow and the next day -- >> if you're a trader and you can't fight the feznessly. >> i'm just saying on the shorm term because that's probably how

they're positions. the market reacts very positively. we had a mini little beating expectations in the economic data. make you maybe a little optimist being we bottomed out here? >> i'm not so optimistic about that, steve. the gdp data that came out last week showed 1.5% growth in the second quarter. the personal encome consumption data that came out suggests that the consumer is entering the third quarter growing very, very slowly. i think we'll be marking down our gdp number down to the range of 105 and we probably won't until we get past the fiscal cliff issue. >> i'm sorry. we'll set this up for a squeeze of what's coming up .

you want to save money on rv insurance? no problem. you want to save money on motorcycle insurance? no problem. you want to find a place to park all these things? fuggedaboud it. this is new york. hey little guy, wake up! aw, come off it mate! geico. saving people money on more than just car insurance.

yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute. bobby? bobby! what are you doing, man? i'm speed dating! [ male announcer ] get investing advice for your family at e-trade.

coming up, a tech disruptor who is capitalizing on mobile. dave morin will join us. and we're counting down to jobs friday. bed all the way to the ceiling... in the middle of a department store. some parents might have scolded him. ♪ jonathan's parents gave him... gymnastics lessons. ♪ it's amazing how far you can go with a little help along the way. ♪ td ameritrade. proud sponsor of the 2012 u.s. olympic team. td ameritrade. it's something you're born with. and inspires the things you choose to do.

you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter. would you mind if to be i go ahead of you?omer. instead we had someone go ahead of him and win fifty thousand dollars. congratulations you are our one millionth customer. people don't like to miss out on money that should have been theirs. that's why at ally we have the raise your rate 2-year cd. you can get a one-time rate increase if our two-year rate goes up. if your bank makes you miss out, you need an ally. ally bank. no nonsense. just people sense.

he has been called the best high frequently economic forecaster in america. joaning us now with his forecast for friday's employment report is chief u.s. economist at high frequency -- what, low frequency stinks? you don't even try low frequency, do you? >> we try everything. >> what the hell's the difference and why do i have to say the best high frequency -- >> i think that was a quote from writer "market watch." it reflects the forecast for the high frequency numbers. frankly, being the most accurate in this business really means

the least inaccurate. >> we need a lot of descriptions of that. i always used lepers with the most fingers, but people write in, they don't like that. >> the forecast for what it's worth is 125,000, which is a little above the 100,000 or so consensus. and a . was on that side. >> what happened last month to adp? >> well, it missed by 92,000. >> i know. why? >> there's a lot of volatility in these data. you look over the lamonths and it's down down by 100 month. >> just because they were gone last month doesn't mean they'll be gone this up?

but frankly, i was too high a month ago. i think the odds favor somewhat better that month. >> is the partition rate going to fall dratically? off bus there''s a preif people lose their first in terms of the black road. there is some legitimate improvement. up. >> know how important it would be to get below 8% by november is it possible to do that based on the par 'tis rate? >> i would say the hochly scenario is job through the 0000

thousand is probably consistent with the other -- >> if demand is luggage in the third quarter, the odds of a spontaneous improvement is pretty low. >> i'm not forecasting it. i'm expecting it to be flat at 8 penalty 2 for the rest of the year. there's always noise in these numbers. we saw how far it fell last year. if it goes down, it helps obama, if it starts going up, presumably it helps romney. you get what you see right now for the next few months. >> what's behind your societyly longer consensus meeting for friday? >> obviously it's a judge are where -- a lot of it was the weaker. part of that weakening for sure it hard to blame the wadata.

i look at other datand i don't think the trend is as weak as 80,000. when you look at education and health care, which chugs along 40,000 a month or so was weak last month. and maybe to the extent the claims numbers have been distorted by unusual seasonal factors with the auto shutdowns, et cetera, maybe there's a little boost in manufacturing well. 125 is our forecast. it's not a nickically strong -- how quickly will we know we're uk at that drk and it's tough to get those right. >> reporter: carl weinberg set up this firm 20 years ago.

i've own been here one week. >> you're the best earn. >> one person said that. this firm was created by carl over 20 years ago and it been very successful. high frequency certainly reflect what is we put out on a daily basis. there's a constant flow of what's happening but we're not losing track of the big picture as well. it's a combination of what's driving markets from day to day and week to week. >> everything that you just said makes me feel that the fed shouldn't do anything else. do you agree with that? >> i saw the clip earlier with larry meyer. i won't get as riled up as the former governor but i'm generally inclined to agree with larry on this. the fed has been up against a lot of head winds. at this think what they're doing is more helpful than hurtful. i thit it would be if they

spooked inflation, that was causing people to worry, having unsenity in the future. >> i think there are benefits. ten-year treasury yields of 2.5 trillion% to -- >> my ount is what's done in the economy. if mortgage rates were 100 basis points higher, i don't think think there's any question. sure it's been a week recovery and you could say a week recovery, therefore the now it's

all ve all very debatable. >> i'm not a big talker on the counterpoints. >> when we come back, our disruptor of the morning. davein is making his way to the squawk set. he's going to join us to talk second media and 1-0%. the future of finance called to break up the banks. scorin with dedicated support tes at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help.

it's no wonder so many investors are saying... [ all ] i'm with scottrade.

the disruptor series continues. the big question is the next stage of social networking now a movement off the beaten half of

facebook. he's senior platform developer at facebook and even prior to that i should say you worked at apple. i got to say one thing about dave. we all talk about facebook and we talk about the ipo all the time. if you go out into the valley and say what is the next cool thing, that's how i even found out about the hat, people were already saying this is the thing. for those who are unfamiliar, what is path? >> path is a more personal social network. we call it a personal network. it's actually designed for your personal life rather than your social or professional life. we limit the number of friends you can have on path. >> 150. >> how did you come up with 150? >> it's based on brain research, united kingdom, robin dubraa will, the maximum sump study

ents rely. doing it also a. when we started the company, i looked at a bunch of data that said that by 2012 the mobile internet be larger than the web. so we made decision to focus entirely on mobile and nothing else. >> will this ever be a web site? >> we do do certainly this evenings with the web, we allow you to push that out on to the web. the company experience will always be -- how could you make money on mogul downby so virtual goods, things like that, a lot of the networks in asia focus on the ability to use a different icon of some kind to sort of express yourself, tbt, do those

kind of things. >> you say onnia. >> explain what you're trying to do here. are you trying to move air force base to path? >> you with a replace then the, do you consider a pumment. the metaphor i like to use is that if facebook built the cities, we're trying to build the homts. we're trying to replicate that feeling you have inside of your personal home where you sort of feel comfortable, safe, have an intermass conversation over dinner, talk about the things that are important in your life. >> i haven't used path but i have used facebook. one of the things that bothers me is i don't feel that i have complete control and tags me in a photo and anybody can find it. i guess that's the theory behind path is that you have a lot more control over it? >> yes. one of our core principles is control. you have full cole over

everything you post, nobody else can influence your -- >> somebody i let into my circle candidate then turn around and share my city and their turkle? >> no. >> i grease -- facebook has a lot of functionality and there's apps being built on top of it. there's always sorts of business there is. i know a number of people who say i'm no longer doing facebook but path is where i live now. >> we focus on simplicity a lot. we're very design driven. so we tend to go for the more simple things. we have sort of five core things you can post to path. we really spent a lot of time trying to get to a mr but you

have some other big investors. don't be modest. who are the other investors? >> kleiner perkins and index are two major investors. >> i was going to ask, we've had facebook have its ipo, we've seen instagram sell to facebook for a billion dollars. how do you see it in an investment of your future? >> we keep going long. hopefully we'll get to the market -- if you're not bragging -- are you able to brag about -- is that a brag to say finer perkins is not -- so -- >> he's a what? >> he's a good actor. >> how many people are working at pathway?

about 40. >> so my question is the context of what we've seen happen with facebook. why do you want to do that? does this change your view of that any any respect? >> obviously there's some good lessons to be referendum about how to manage the process. >> i was always under the impression marg zuckerberg wanted to -- obviously overtime we developed a system and it's good. can you manage what point you go like will but for us it's to build a long-term company. >> right now you're on i phone and also on and detroit. do you have an opinion?

>> we see andrew slightly increasing right now. but i'm an apple guy on heart so i'm long on apple. >> hume people are using it? facebook has a billion people. >> we're above $3 million now. >> ins sifs told sick months ago the path was the new facebook and the cool new thing, what do you see valley that is the new app that you're using? interesting, i rel that of this case -- what does it do? >> it sort of introduces you to interesting people as you walk down the street. the idea is to introduce you to people you never talk to. >> ah! >> it's the complete opposite of what you do. they do it in a very factful

way. >> it's called highlight? >> yes. >> this afternoon download path and then download highlight. thank you. appreciate it. very interesting stuff. >> would you like to know what stock is trading an an all-time high? >> all-time high? >> yes. i think. it's at a ten-year high. coming up, we're going to head down to the new york stock exchange for the latest buzz from wall street. plus stocks on the move, that might be one of them, head of the opening bell. ♪ because you had a bad day >> had a bad day in the market? need to turn things around? start fresh every weekday morning at 6:00 a.m. eastern with up to the minute news on the earnings economy and politics. get out of bed, watch "squawk box" and get out of the red. ttd#: 1-800-345-2550 in times like these, it can be tough to know which

ttd#: 1-800-345-2550 way the wind is blowing. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-345-2550 talk to chuck. ttd#: 1-800-345-2550

welcome back to "squawk box." google is postponing a launch of the nexus queue, the first electronics device, announcing the delay of the media player

device. it says it wants to add more features and functions. jim cramer joins us now. city pointed out comcast's high a couple weeks ago. i'm not sure it's -- 12 1/2 year high, intraday where it is right now, above 33. was it up in the 40s back in the '90s? >> i was focused on the operating cash flow which are terrific, the ads are great. they obviously are our parent. time warner did not have these kinds of numbers. obviously if you're like it, you can sake jim you're obviously currying favor. i don't know, joe. this is domestic security, a company i don't have to read the asterisk about how bad spain is, i don't see anything about germany. >> you're from philly, too. there's a million reasons why you're conflicted. i can name more, but i believe

you on this one, jim. >> people want steady stories with great operating cash flow and good growth. you can't get any overseas, comcast, a domestic company, rather strong. i know you embrace this. the united states just isn't doing that badly. >> i know. the companies are doing great. i guess if there was more demand, they would feel more comfortable about long-term decisions. >> but comcast looks like a bank. operating cash flow of 4.2%, these are the number you expect when people are buying homes, putting in cable. the business network numbers say that small business is doing good. i keep coming back to the deal, there is strength at the company level, just not at the washington level. >> i think the stock would need to be -- i think that probably -- i'm not sure whether that's showing a weekly -- but

it should have been an intraday at some point at 36. at this point you're looking at that move -- that is an -- that's continues nbc. part of that is since the acquisition of the 51% that you're looking at on the right-hand side of that chart, right, jim? from the teens up to. >> it's up 35% over -- >> you know, the number was, as the relee says, anticipated, and obviously positive about the opportunities. you can argue this is despite nbc, or shows you how strong we are, but nbc is not as important as this free cash flow generated from the everyday cable business, which is very strong. >> any improvement at all in nbc would be material to the results. >> fios didn't have good ads. time warner's quarter was sloppy. this is a pristine quarter.

you've got to wonder what would happen. >> are you ready to say that cable is better than what verizon and at&t are offering, jim? >> well, verizon and at&t are wireless plays. i thought fios did not report a great quarter, but there's other good things that are happening. at&t did have good numbers, but so is comcast. they all have the same trajectory. american companies doing well. we're totally obscure about wlz happening in spain, but comcast isn't it. comcast is in philadelphia. maybe there's some good restaurants, and some italian restaurants, including geno's. >> they're all probably at the olympics, but unfortunately i think they could pull a tape. thanks, jim. i'm glad we had you to talk about that. see you if a few minutes. when we come back, final thoughts from steven roach. tomorrow, "buy, sell or

rent"? that's all day on cnbc. tomorrow on "squawk box," the ecb's decision on interest rates, closely watched u.s. jobless claims data, former fed president. thomas hoenig. former ubs chairman robert wolf. plus gm's quarterly report, and first on cnbc interview with general motors' cfo. three hours of "squawk box" you can't afford to miss, starting tomorrow at 6:00 a.m. eastern. drinks green stuff. he says he's from albuquerque. i'm not buying it. i mean, just look at him. and one more thing -- he has a spaceship. [ whirring ] the evidence doesn't lie. my dad's an alien. [ male announcer ] the highly advanced audi a6. named to car and driver's 10 best. experience the summer of audi event and get exceptional values on the audi you've always wanted.

riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking... oh, i see...solitary. just a man and his thoughts. and a smartphone... with an e-trade app. ♪ nobody knows... [ male announcer ] e-trade. investing unleashed.

[ male announcer ] e-trade. it's something you're born with. and inspires the things you choose to do. you do what you do... because it matters. at hp we don't just believe in the power of technology. we believe in the power of people when technology works for you. to dream. to create. to work. if you're going to do something. make it matter.

welcome back, everybody. our guest host has been stephen roach. you're our china expert. when we look and try to figure out if china is actually executing a soft landing or if this is something worse this time around, what's your take? >> soft landing, becky, i think. the economy is down as you would expect from, but i think the second quarter 7.6% is pretty close to as bad as it will get. that's down about four points from the high a couple years earlier, but a far more benign

and gentler descent. they've got a lot of ammo on the policy front that they can use and that they will be using. the president of china indicated further a still lug overnight in that regard. so i would that bet again this economy. >> what about the yuan and how it stacks up against the euro? they have turned things around and pusheded yuan higher as a result. >> i think currency management is one of the their counter-cyclical tools. they were letting the currency and they have been appreciate steadily since july of '05, but during the financial crisis, they kept that in abeyance. they may be doing the same right now. >> okay. we want to thank you very much for being with us. always a pleasure. >> you have to come back, because we have other guys coming b t